Where's my money?
A broker's status as a ‘procuring cause’ has never been black and white, and the ambiguity is increasing as the brokerage sector evolves. SuperyachtNews.com speaks exclusively to maritime attorney Michael Moore of Moore and Co about some of the confusion that surrounds the Procuring Cause Doctrine in the changing landscape of yacht litigation.…
Accepted in a number of jurisdictions, a broker is the
‘procuring cause’ of a yacht sale, and therefore legally entitled to a
commission from the sale, "if a) the broker has brought the two parties
together, or b) the sale is completed as a result of negotiations
initiated by the broker, or the parties intentionally exclude the broker
from their negotiations."* While Michael Moore, maritime attorney of Moore and Company, admits that disputes over the Procuring Cause Doctrine have always existed in the superyacht industry, the types of disputes he is experiencing are changing.
“The Procuring Cause Doctrine really is the hotbed of litigation in the brokerage world,” he explains. “And one new world thing that I am seeing more of, because we now live in a world that just moves so fast, are listing agreement terms that last just three months. Back in the day things were longer lasting and sellers would sign a contract with a broker for a year.
"We had one case recently where there was a string of three listing agreements and during each listing agreement the same buyer made an offer and only the third time was successful. Which broker is owed the commission in this scenario? In my view the big battles that are coming up these days are when there are a string of listing brokers such as this and this is where the wording used in contracts is very important. There is a big difference between a broker ‘showing’, ‘presenting’ or simply ‘providing information about’ a vessel to a buyer in order to be entitled to a commission.”
Moore comments that, because of the shortening longevity of listing contracts, he is seeing an increase of cases where there are multiple listing agreements involved so that disputes over which broker is owed the commission start. “It seems to me that there is an abbreviation of the relationships,” he observes. “But this is where we are starting to see a new clause cropping into contracts and I think it is a very clever clause on behalf of the seller. It says that, ‘if the seller hires a new listing agent, then the previous listing agent has no rights’.”
So does most of the confusion surrounding the Procuring Cause Doctrine come from the selling party not being clear on the process of enlisting a new broker? “I do think there is remarkable confusion or at least intentional confusion,” responds Moore. “In a yachting context it seems that we are seeing more sellers these days who sign a written contract with a listing broker and do not think that’s a powerful document. But it is in fact a binding contract and the courts will enforce it. They will enforce the pure language that obligates the seller to pay that listing agent a broker’s fee.”
As Moore has had extensive experience in representing both sellers and brokers in such disputes, he has also observed that some brokers are not fully aware of the bigger picture either. “I think brokers are very informed but they are informed about what is in their house agreement,” he explains. “In my opinion they are not necessarily informed about how to make their clauses better from their point of view. It is very rare that we have a proactive client that asks us to look at an agreement and how can we make it better; they generally come to us after something bad has happened.”
“In an age of internet, e-mails and electronically stored information, you usually have a very clear record of who has done what and with whom,” concludes Moore. “So it all comes down to the agreement wording and all parties need to read these things and not just assume that it’s a form and that it doesn’t have meaning.”
*'A Florida Yacht Broker's Guide to Navigating Procuring Cause Doctrine' by Blair Brogan, attorney at Moore and Company
“The Procuring Cause Doctrine really is the hotbed of litigation in the brokerage world,” he explains. “And one new world thing that I am seeing more of, because we now live in a world that just moves so fast, are listing agreement terms that last just three months. Back in the day things were longer lasting and sellers would sign a contract with a broker for a year.
"We had one case recently where there was a string of three listing agreements and during each listing agreement the same buyer made an offer and only the third time was successful. Which broker is owed the commission in this scenario? In my view the big battles that are coming up these days are when there are a string of listing brokers such as this and this is where the wording used in contracts is very important. There is a big difference between a broker ‘showing’, ‘presenting’ or simply ‘providing information about’ a vessel to a buyer in order to be entitled to a commission.”
Moore comments that, because of the shortening longevity of listing contracts, he is seeing an increase of cases where there are multiple listing agreements involved so that disputes over which broker is owed the commission start. “It seems to me that there is an abbreviation of the relationships,” he observes. “But this is where we are starting to see a new clause cropping into contracts and I think it is a very clever clause on behalf of the seller. It says that, ‘if the seller hires a new listing agent, then the previous listing agent has no rights’.”
So does most of the confusion surrounding the Procuring Cause Doctrine come from the selling party not being clear on the process of enlisting a new broker? “I do think there is remarkable confusion or at least intentional confusion,” responds Moore. “In a yachting context it seems that we are seeing more sellers these days who sign a written contract with a listing broker and do not think that’s a powerful document. But it is in fact a binding contract and the courts will enforce it. They will enforce the pure language that obligates the seller to pay that listing agent a broker’s fee.”
As Moore has had extensive experience in representing both sellers and brokers in such disputes, he has also observed that some brokers are not fully aware of the bigger picture either. “I think brokers are very informed but they are informed about what is in their house agreement,” he explains. “In my opinion they are not necessarily informed about how to make their clauses better from their point of view. It is very rare that we have a proactive client that asks us to look at an agreement and how can we make it better; they generally come to us after something bad has happened.”
“In an age of internet, e-mails and electronically stored information, you usually have a very clear record of who has done what and with whom,” concludes Moore. “So it all comes down to the agreement wording and all parties need to read these things and not just assume that it’s a form and that it doesn’t have meaning.”
*'A Florida Yacht Broker's Guide to Navigating Procuring Cause Doctrine' by Blair Brogan, attorney at Moore and Company
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